Top-tier financial advisors,expropriation and Chinese mergers & acquisitions |
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Institution: | 1. Business School, China University of Political Science and Law, China;2. Faculty of Commerce, Hong Kong Shue Yan University, China;3. Business School, Beijing Technology and Business University, China |
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Abstract: | The empirical literature contains mixed evidence regarding the relationship between advisor reputation and returns in mergers and acquisitions (M&As). However, very few studies consider the detrimental effect of expropriation by controlling shareholders and value creation role of top-tier financial advisors. We revisit the role of financial advisors in M&As by examining whether and why top-tier advisors affect acquisition quality in the Chinese market, finding that they generate substantial value for acquiring shareholders, though value creation is lower for high expropriation-possibility acquirers. We also show that top-tier financial advisors help improve operating performance and reduce bid premiums. The results contribute to the takeover literature by shedding new light on the role of financial advisor in acquisitions. |
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